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I can tell you with 100% certainty that the U.S. economy will go through a recession. And that the stock market will fall into a bear market. The problem is that I can't tell you when either of those two things will happen, though it is likely they'll happen at the same time. As an investor, you have to be ready to suffer through completely normal pullbacks like these. Here's a way to prepare if you are worried about a recession and/or a bear market in 2026.
Think about your life and the things you spend money on. If there is a recession, will you stop using electricity? Will you stop buying food? The answer is likely no to each of these, which is why utilities and consumer staples companies tend to hold up well even in the face of economic and market adversity. That said, are you likely to run out and buy a new car if you are worried about the economy? The answer is likely no, which is why automakers tend to perform weakly during recessions.
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All of that may sound simplistic, but remember that the economy is made up of people just like you. And, adding to the allure of utilities and consumer staples stocks is the fact that they often pay reliable dividends. That gives you something to focus on other than stock prices when times inevitably get tough.
For most investors, focusing on the biggest and best companies is a solid long-term investment strategy. On that score, utility giant NextEra Energy (NYSE: NEE) and consumer staples giant Coca-Cola (NYSE: KO) are both attractive choices for those worried about a recession. Each has increased its dividends for decades, with Coca-Cola in the Dividend King club (50+ annual increases).
NextEra is like two businesses in one, with a slow-and-steady regulated utility complemented by a fast-growing clean energy business. It projects 8% earnings growth through at least 2030, as electricity demand has increased dramatically alongside advances in artificial intelligence and electric cars. That hints at more reliable dividend increases ahead.
Coca-Cola, meanwhile, is already dealing with belt-tightening consumers. And its beverage business continues to shine just the same. Case volume rose 3% in the first quarter of 2026, helping drive organic growth of 10%. Clearly, Coca-Cola's customers are very loyal to its brands, which are affordable luxuries, even when budgets are strained. Once again, more dividend increases seem highly likely in the years ahead.
There's no way to know if there will be a recession or a bear market in 2026. They are unpredictable events. Which is why investors should always have some core stocks, like 2.5% yielding NextEra and 2.7% yielding Coca-Cola, in the mix. If you don't, now could be the time to look at these two stocks, or similar utility and consumer staples makers.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.
How to Recession-Proof Your Retirement Income Before Summer 2026 was originally published by The Motley Fool